Which Comes First, Electric Car Acceptance or the End of Car Dealerships?

Mish

Auto makers are pushing electric vehicles but buyers shun them. Something has to give.

The Future is Electric, But When?

Last year battery-powered vehicles made up fewer than 2% of U.S. auto sales.  Tesla sold nearly all of them. 

Despite the big push towards electric by dealers, Biden, the media, and climate fear mongers, Car Dealers Struggle to Square Industry Enthusiasm With Shoppers’ Reality

Auto makers are moving aggressively to expand their electric-vehicle offerings with dozens of new models set to arrive in coming years. About 180 GM dealers, or roughly 20%, have decided to give up their Cadillac franchises rather than invest in costly upgrades that GM has required to sell electric cars.

“The biggest challenge is that dealers have a bit of ‘boy who cried wolf’ syndrome,” said Massachusetts dealer Chris Lemley.

Car companies have promised for years to make electric cars mainstream, but produced only low-volume, niche models. “So when we are told, ‘This time, we really mean it,’ it’s easy to be skeptical,” Mr. Lemley added.

Tesla Inc.’s influence on the electric-car market has created a new standard for car shoppers, offering an online transaction and a simplified lineup with no price negotiation.

Volvo Cars CEO Håkan Samuelsson recently said that all future battery-electric vehicles would be sold exclusively online and the price would be set centrally, eliminating the ability to haggle.

The marketplace is moving from the physical dealership to online. That’s what will happen in the next 10 years,” Mr. Samuelsson said.

Best-Selling Electric Vehicles in 2020

best-selling electric vehicles in 2020

GM's Electric Pledge

The WSJ notes that Chevrolet dealer Brad Sowers sold 4,000 cars last year. He sold only 9 electric Bolts.

On January 28, I noted GM to Phase Out Gas-Powered Vehicles by 2035, Carbon Neutral by 2040

That's one heck of a commitment given Tesla has about a 79% share of the 2% of total sales that are electric.

Volvo to Make Only Electric Vehicles by 2030

MarketWatch reports Volvo to Make Only Electric Vehicles by 2030 and Require Online Purchase.

The Swedish automaker said Tuesday that it is phasing out the production of all cars with internal combustion engines — including hybrids

“There is no long-term future for cars with an internal combustion engine,” said Henrik Green, Volvo’s chief technology officer.

Despite the rising number of EVs available in the U.S., fully electric vehicles accounted for less than 2% of new vehicle sales last year. Americans continue to spend record amounts on gas-powered trucks and SUVs.

How Will Dealers Fit In?

Let's assume GM pulls off this seemingly miraculous feat despite current customer preferences. 

What About Service?

Dealers make a lot of money off of service. 

What are the service departments and mechanics going to do? 

Service won't go away entirely, but the lion's will be body shops and tires, not oil changes and expensive engine tune-ups.

Death of the Dealer

One way or another, the death of the auto dealer as we know them today is not that far off.

But before any of this happens, we need better batteries, cheaper batteries, faster charging batteries, and more battery charging or battery swapping stations.

Big Bang Theory

Mish

Comments (73)
No. 1-28
ohno
ohno

Not only do we need better batteries, etc we also need cars that don't cost 40k and up. Or 20 year financing. Something 'did give' in CA as one town outlawed new gas stations and replacing pumps. In other words, you will drive electric by force. I really wish these bastards would leave us the hell alone.

dbannist
dbannist

I'm a firm believer in the power of free markets.

The only way electric cars will go mainstream is if it's economically beneficial to do so.

When electric cars and the cost to own them falls below the cost to purchase and operate a gas powered car, then and only then will they go mainstream and expand beyond the niche market.

It's getting closer, but not there yet.

I will never ever pay more than 5k for a car. My cars last upwards of 15 years after I pay 3-5k with little maintenance. I would never consider paying 40k for a car, that's more than I expect to pay over my entire life for cars combined.

There's a lot of people like me.

PecuniaNonOlet
PecuniaNonOlet

Mish, it seems clear to me that “ownership” of cars is being phased out in favor of “subscription” model. Volvo has an app called “care by Volvo” where you sign up for a sub on a car that includes car, 100% maintenance and insurance for a fixed monthly fee.

From my view, cars are a huge waste of money. You pay tens of thousands for an asset that you drive in the morning to work, park in a garage or lot and sits there for 8 hours then drive home to park in garage where it sits for another 16 hours.

If your work requires lots of driving it may make sense to own but at this point in my life, I prefer Uber or daily/weekly car rentals when i need to drive a lot.

lesbaer45
lesbaer45

"Electric" cars still have motors, it's not just pure current turning those wheels. Alignment, steering controls, brakes, even the batteries will need some 'service' as connections are jarred loose or corrode given the environment in which they operate. Never mind anything that rotates is still going to need oil/grease changes unless bearings/drive shafts are now magically non frictional.

To say absolutely nothing about the 'service' that will be required by the endless sensors and software required to run these things. ECM's and other electrical/software gremlins are just one of the many reasons the dealers garage bays are often full. Good luck when the entire vehicle is run by them.

Electric cars have A/C units, heater cores, window motors, door locks, even common windshield wipers that go bad.

I don't think the traditional test drive and dealer delivery never mind the service bays will ever go away. Change yes, they have to, go away no.

Then again I'm not buying the total electric thing by 2030-2040 either. Cynic I am.

TexasTim65
TexasTim65

The slower adoption in America is due to the current love of SUV's and Trucks. Most passenger car models are dead which is why Ford and GM are abandoning the passenger car market in favor of SUV's and Trucks (also those are where the huge profit margins are).

Once a decent Electric Pickup and SUV hits the market at a competitive price (ie without subsidies) I suspect electric sales will explode. Until they will languish or be niche only.

davebarnes2
davebarnes2

Patience grasshopper.
The trend is towards BEVs.
The trend is towards manufacturers selling direct.

KidHorn
KidHorn

I think by 2030, the majority of new cars sold will be electric. It has too many advantages over ICE. Costs will come down.

Quanta
Quanta

Agree with dbannist. I would never pay $40k for a car. Wife and I purchased brand new basic model Priuses for ~ $20k with a 10yr extended warranty.

Zardoz
Zardoz

I have a Tesla, and about once a month some guy in a noisy Honda or BMW tries to race it, gets beat terribly, and gets all pissed off about it. Apparently having a stock car built with modern tech is cheating.... you are supposed to drive some econobox rigged out with hair dryers and a coffee can muffler to squeeze another 30 HP out of a 250 HP motor. It's a religion.

Aside from the range issue (which doesn't really bother me, I have another car for trips... and haven't really taken any), my electric car makes an ICE car look like a Stanley Steamer. It is massively better in every way. By the time this battery is shot, I'm pretty confident I'll be able swap in a 400 mile battery. I may be dead by then though.

TexasTim65
TexasTim65

The other thing I forgot to mention in my comment above is that fleet sales (rental cars) account for roughly 20% of car sales

Those will remain ICE vehicles for quite a while yet (ie last to move to Electric) because renters tend to drive longer distances, stay in hotels (no charging) and lack local knowledge of where to charge.

All that said, a 20 year time frame isn't that long. Think back 20 years ago to 2000 and hardly anyone was online and the majority who were still used dial-up. Napster was the only way to stream anything and it was music and very slow. Blockbuster ruled video rental (ie video on demand). Hardly anyone would have imagined what would happen in far less than 20 years. Blockbuster long gone and streaming video on demand (Netflix and others) now threatening cable companies. Change happens fast, but it has to be change that benefits people without subsidies. Once Electric surpasses ICE in every way it will be adopted quickly.

frozeninthenorth
frozeninthenorth

Mish, Tesla's S & X were never going to be mass-market vehicles. The Y and the 3 are nearly there but are still in the "luxury" band of cars. Electric cars will only "explode" when full self-driving (long promised still waiting) is available. Honestly, is there anything more wasteful than a $40,000 asset that sits at home 22 out of 24 hours doing nothing, and needs to be serviced every few months...

Electric cars/trucks have several advantages -- few moving parts, little or no maintenance, and lifecycle costs. There is still the issue of upfront cost but the prices are dropping, Tesla is finally introducing LFP batteries (safer, more cycles) to its range of cars.

shamrock
shamrock

Even if 100% of cars and trucks are electric that doesn't do shit for global warming if the power used to charge the batteries isn't wind, solar, hydro or nuclear.

Casual_Observer
Casual_Observer

I don't quite understand how or why the price of cars hasn't come down over time like every other piece of technology. It seems to be more like a house. Anything reliant on financing through the banking system has a price that goes up not down. Great scam. Imagine a world where you had to pay cash for everything. Prices of cars and homes would crash quickly and be in line with other consumer goods.

1KoolKat
1KoolKat

Will the electrical grid be able to support a massive number electric vehicles?

1KoolKat
1KoolKat

Will the electrical grid be able to support a large number of electric vehicles?

numike
numike

Electric Vehicles Are the U.S. Auto Industry’s Future—if Dealers Can Figure Out How to Sell Them
Car dealers say they are struggling to square the industry’s enthusiasm with shoppers’ reality (wsj)

Sechel
Sechel

I'd phrase it differently. The big hold-up seems to be in electric recharge stations. once that is solved a lot more people will migrate to the new tech. For this to happen we need crtiical mass. Absolutely essential for government to jump start and get the fleets on electric. This non-sense where DeJoy undermined Biden and putting in a ig contract for gasoline powered postal vehicles was dysnfunctional and petty. I underand they can be upgraded later but this is the deep state Trump refers to.

Brian Reilly
Brian Reilly

It isn't that electric cars will displace IC cars, it is that automobility (beyond golf cart range) is just about over in these no longer united states. It would take a LOT more than marginal improvements in existing technology and electric grid service to make the sort of widespread use of electric vehicles a reality. The plan (read about it, this is no secret) is to do away with hydrocarbon fuels and auto use as a part of the great reset. There will be fewer people around to driveas well, but that is a different part of the plan.

All this talk about electric cars is interesting, but not important.

Bungalow Bill
Bungalow Bill

Tesla has quality issues that you often read about. I really think the future is in hydrogen cars like Toyota and Honda are developing. They are much easier to refuel than electric cars.

Quanta
Quanta

I do not plan on buying anything based on hydrogen. Hydrogen is explosive.

2 Replies

Kimo
Kimo

Any vehicle that you can replenish in 5 minutes to take you 300 miles is explosive.

Quanta
Quanta

No its not. You're confusing energy density of fuel and explosives. The energy density of fuel is higher.
For example, TNT vs gasoline:
TNT 4.2 MJ/kg

Gasoline contains 47.2 MJ/kg Megajoules per kilogram (though gasoline requires an oxidant, so an optimized gasoline and oxygen mixture contains 10.4 megajoules per kilogram)

Rbm
Rbm

I could see having some sort of hybrid. Electric for town and still have the ability to travel.
Talked to a guy years ago he said his family electric car was always on the road. Cheaper than gas no maintenance such as brake pads / oil change/ fluids etc.
I would think gas autos will still be needed for places like wyoming where it gets really cold/ or say remote places like alaska. Were you need carry a extra can of gas just in case. But for the average person in the average place should work fine.

Quanta
Quanta

In my view infrastructure is not the primary problem for the EVs. The primary problem is the $40k cost, and also poor spec comparison to something like a Prius for regular every day use.

Morr314
Morr314

A new Tesla Model 3 has a base price of around $40,000 and when you add a few options, sales tax,license,and title you are pushing around $50,000.
If you order one today you can receive it in about 4 to 6 weeks so there isn’t that much of demand problem.
The battery pack lasts about 8 to 10 years and cost about $10,000 to replace and can take 2 to 3 days to replace.
So those 2012 and 2013 Model S battery packs are starting to reach the end of their life cycle and the other years will follow shortly.
Do you want to purchase a 8 year old Tesla that needs a battery pack?
If battery cars are the answer then stop making gasoline today and see what happens.
The demand for battery cars is just not there.

PaulS47
PaulS47

This is all still very problematical and impractical - it needs a lot more work:

Battery swapping: pay through the no$e for the battery in a new car, then get the battery swapped out for a worn-out piece of junk holding very little charge. How will anyone ever be able to trust swapping stations in any general way? How will a trustworthy swapping station ever be able to trust just any old incoming car?

Battery charging: takes forever. Who has an hour or three to waste at a charging station? The only practical approach might be to own a hou$e with an enclosed lockable garage having expen$ive wiring for at least overnight charge. Because of vandalism, overnight charging will be completely useless without a locked enclosure.

Weather: battery toy$ seem more suited for $outhern California and Florida than anywhere else in the USA, Canada, or even most of Europe. And in cold weather they'll remain mostly toys until and unless batteries are vastly improved. Difficult constraint: said batteries have to be improved in a manner that doesn't encourage them to explode in hot weather.

This kind of stuff is we get with today's bog-standard political posturing that's totally unhinged from reality. Just like with a lot of other things.

Felix_Mish
Felix_Mish

Predictions for 2030 or 2035 are like car company predictions a half dozen years ago that they'd have full self-driving by 2020/2021. Only with an added dose of horoscopic tea-leaf. Such feel-good predictions are humming a tune in the dangerous dark.

Ignore them.

You want to know the future? For the last 200 years humanity has inexorably raised the value of people relative to things. What kind of car does a rich person buy? That's the car the average Joe in '35 will buy.

Except car competition is not between EVs and ICEs. It's between cars and fiber optics.

RonJ
RonJ

"The WSJ notes that Chevrolet dealer Brad Sowers sold 4,000 cars last year. He sold only 9 electric Bolts."

I remember the Edsel. It didn't sell well either.

Sechel
Sechel

car compainies now think global platforms. they will not make unique vehicle for just the American market. Electric vehicles from each of the major manufacturers will be available on each continent at roughly the same time. It may be a little sloppy but it will happen. Gov't just needs to do its part to ensure the infrastructure is there.


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